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| Why You Need Title Insurance When you buy a home, you want to be certain that it is safely yours. But even the most diligent search of the public records could fail to disclose a number of title defects such as a forged will or deed, a title transfer by someone under age, or a married person conveying real estate without his or her spouse. Fraudulent impersonations. Secret marriages. Undisclosed heirs. Invalid divorces. False affidavits. The list of potential problems that can surface goes on. Without the protection of title insurance, you'll be in jeopardy of losing your investment. Examples of Why You Need Title Insurance The Walking Corpse The homeowner was a widow with seven sons. One of her offspring, the captain of a fishing vessel, had not been heard from for many years. Presumed lost at sea, he was declared legally dead. When the widow passed away, her six remaining sons inherited her home. It was an attractive house, and they put it on the market at a modest price to facilitate settlement of the estate. Recognizing a bargain, the Montgomerys bought the property. They were delighted with their new home - until the long lost sea captain returned from the dead. It turned out the widow's missing son had decided years ago to start a new life elsewhere. When the captain eventually returned and found the house had been sold, he promptly filed a claim against the Montgomerys for his rightful share of the property. News Travels Slowly A lady of means placed her home in the country up for sale. Before embarking on a cruise, she gave her lawyer power of attorney on the property. Weeks later, the Harper family decided to buy the country place. Its fertile land and picturesque setting were ideal for farming. Exercising his authority, the attorney signed the deed and sold the property to the Harpers. Everything appeared proper, except for one hitch: The woman died in a distant part of the world before the attorney signed over the property. When the lady's heirs discovered that the land had been sold after her death, they claimed the deed was invalid and demanded their right to the property.
The Refined Forger The Carters were charmed by the elderly lady. Impeccably mannered, she explained that her country home had been vacant for some time, so she was letting it go at an irresistible price. The Carters leaped at the offer, only to find out later they were unwitting victims of a classic forgery caper. More cunning than charming, the old woman had learned that the real owners of the country home were living in Europe. She forged a deed to the property and had it recorded in her own name. Her low asking price assured a quick sale. By the time the Carters were made aware of the scam, the little old lady was long gone. John's Other Wife John and Maxine were an ideal couple: pleasant, personable, respected among their peers. They made quite an impression on Mr. and Mrs. Denton, who purchased their home. The Dentons were less impressed, however, when they heard from John's real wife. It seems that Maxine wasn't John's wife but his mistress, which meant that the deed of ownership she signed was invalid. The Dentons did eventually meet John's legitimate wife - in a court of law when she claimed her legal right to the property. How Title Insurance Protects Are homeowners helpless against these and other pitfalls? First, a service known as a title search describes - as well as possible- the condition and quality of the title to the land you are buying. Then, your title insurance protects you against mistakes or threats that might otherwise result in financial loss to you - including those hidden, unknown items. Your title insurance protection is a permanent assurance that your ownership and use will be defended promptly against claims at no cost to you, whether the claim is valid or not.
Who Title Insurance Protects There are two basic types of title insurance protection - one for the mortgage lender and one for the homeowner or real estate investor. If a mortgage is to be placed on your new home, the mortgage lender will probably require that you purchase title insurance to protect the institution's position as a holder of a mortgage loan. But this mortgagee's title insurance policy doesn't protect you, the homeowner. You need an owner's title insurance policy to protect your investment. You pay only once. There are no renewal premiums, and there is no expiration date on the policy. Yet the protection lasts as long as you, or your heirs, retain an interest in the property. A Small Cost for Years of Protection The real estate you own represents stability, permanence and the hope of the future. Don't take a chance and let your property be taken from you because of a flaw in the title. It makes good sense, for the relatively small amount it costs, to protect yourself with title insurance. Disclaimer: The information provided on these pages is for general use, and is not intended to take the place of legal advice. For specific legal questions, please contact an attorney.
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